To understand the mechanisms involved in the stage-specific developmental pattern of chemically induced renal tumors in the rat and to identify possible targets at risk in carcinogenesis, explant and cell culture models have been devised which allow an examination of the events of normal development, both tubulogenesis of metanephrogenic mesenchyme and branching morphogenesis of the ureteric bud. Previously, pituitary extract was found to contain an inductive ability that could replace inductor tissues in culture. Now we have established that basic fibro- blast growth factor (bFGF) can mediate the early events in tubulogenesis by inducing compaction of mesenchyme and upregulating the expression of the transcriptional activator/suppressor WT1, hepatocyte growth factor, and the proto-oncogene c-met. FGF by itself, however, cannot induce the epithelial conversion of mesenchyme to form tubules. For this, an additional factor called diamorphin that fails to bind a heparin-affinity column can, in combination with bFGF, induce tubule formation.